Argentina arguably has the best beef and grain growing regions on the planet. The Pampas are grasslands that run from the cooler south to the subtropical regions of the north. They are roughly equal in size to the United States' agricultural zones; but with only one-eighth the population of the United States, almost all of Argentina's produce is available for export. Argentina has outproduced America in beef products at times. A relatively small population blessed with an enormously large fertile agricultural base; it is inconceivable that Argentina should be having to freeze food prices.

Yet, President Cristina Kirchner's Admistration is having to do just that.. When one looks at Argentina's history, one stands amazed at how its governments can make such abysmally bad decisions with frightening regularity. It beggars description.

Argentina has food, oil, gas, natural wealth, and industry. It has high rates of literacy, with a primarily European population; and no major racial problems. In 1929, it was the fourth richest per capita country on the planet. Only the USA, Britain, and Canada outperformed Argentina. By 1945, after grain and beef sales during the war, even Britain was in debt to Argentina. The first decades of the twentieth century were a period of increasing prosperity and political freedom. The first freely elected government took power in 1916 and by 1929 Argentina was the fourth richest country in the world in terms of income per head. A coup in 1930 ushered in a series of military governments

In 2001, Argentina issued government bonds (Sovereign debt) in the American Market that were supposed to be guaranteed by their government.

Their debt collapsed a few years later and investors and bond holders were asked to receive less than 50% on the dollar or nothing.

One Hedge fund manager -— Paul Singer ( of Elliott Management, where coincidentally, Mitt Romney puts some of his money in), REFUSED the Argentinian offer and sued in court. He won too.

Singer has been trying for years and years to get Argentina to pay a 2001 bond it owes in full. Because it recently won a court judgment saying that Argentina owes it money, it was able to get an injunction from the government of Ghana saying it’s entitled to take the ship — ARA Libertad, a training ship owned by the Argentine navy.

Elliott Management and Argentina are learning the hard way, that in an insolvent world where there is no driving force to push the debtor and creditor to reach amicable, if increasingly more unpleasant outcomes (such as Europe, if only for the time being), one has to resolve to ever more unpleasant tactics to get what one believes belongs to them.

What this really means is that Western courts have decided that Elliott has not been stripped of pre-petition rights despite, or rather in spite of, holding out, and is entitled to collecting up to par recovery. There is one problem: there is absolutely no enforcement mechanism!

And therein lies the rub: because how does a court located on Pearl Street in New York order the Argentina State Treasurer located in Buenos Aires to wire a payment on bonds, via intermediary banks, that Argentina effectively has disowned? It can’t. Or rather, it can’t using peaceful means and/or simple M.A.D. coercion of the type one can apply in Europe (remember: Greek creditors had to agree to a massive haircut, and more to come, as the alternative was a Greek default, Grexit, collapse of the Eurozone, dissolution of the EUR, redenomination, massive losses on Spanish and Italian bonds, and who knows what other apocalyptic scenarios). It can, of course, use military means but the time for a Falklands-type escalation has not come yet.

I read the article and was hoping for more details regarding the cause of the skyrocketing food prices. I understand the general cause, the government interference in their economy, but what is being blamed for this specific action.

My bet is that by freezing the cost of human food, that eventually it will be cheaper for the ranchers to kill their herds and leave them to rot. At some point, the feed grains will become too expensive to sustain beef production.

The leftists never learn that price caps ALWAYS lead to shortages. In this case, they will be letting their own population starve while toasting their “smart” policies that make sure that the food would have cheap prices if it were available.

And therein lies the rub: because how does a court located on Pearl Street in New York order the Argentina State Treasurer located in Buenos Aires to wire a payment on bonds, via intermediary banks, that Argentina effectively has disowned?

You seize the assets (buildings/property) of the Argentinian government located here in the US.

17
posted on 02/08/2013 8:25:02 AM PST
by Hotlanta Mike
("Governing a great natiorn is like cooking a small fish - too much handling will spoil it." Lao Tzu)

Argentina and America share many things in common, historically. One was their per capita GDP at the beginning of the 19th century, IIRC. Argentina was one of the top 10 wealthiest nations and Europeans, fleeing poverty, emigrated there.

It is a historic lesson in economic divergence. They took the road to socialism and crony capitalism a lot earlier. FDR was limited, believe it or not.

Disclaimer:
Opinions posted on Free Republic are those of the individual
posters and do not necessarily represent the opinion of Free Republic or its
management. All materials posted herein are protected by copyright law and the
exemption for fair use of copyrighted works.